Question
Dabur & Britannia Companies are both looking for the lowest cost possible. The following rate structure is faced by them: Dabur Britannia Credit Rating AA
Dabur & Britannia Companies are both looking for the lowest cost possible. The following rate structure is faced by them:
Dabur Britannia
Credit Rating AA BB
Cost of fixed funds 10.0% 13.0%
Cost of floating funds Libor + 0.5% Libor+1.0%
What kind of funding does the comparative advantage of Dabur (Britannia) have?
What are the maximum savings available to both if a swap were arranged?
Illustrate a swap in such a way that savings are equally split between the two.
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Essentials Of Corporate Financial Management
Authors: Glen Arnold
1st Edition
1405847042, 978-1405847049
